Xbox Business Update Podcast | Xbox Everywhere Direction Discussion

[eastmen]

Haven't we heard this for ten years now?

More than 10 years. G-Cluster launched in 2003. So we are at year 23.

 

[eastmen]

I'm not understanding this all or nothing viewpoint with respect to cloud gaming.

Gaming already currently is very fragmented. Mobile phone gaming is now the largest share but it hasn't removed all other forms of gaming, it also effectively captured a new audience. New handheld gaming devices have recently carved out a slice as well. The traditional/conventional subsets of gaming exist as well

Mobile gaming is more casual gaming than what the console market is. I don't really know anyone playing skyrim or other big games on phones. Mostly they are made for moible or something like a stripped down fps game

Also are the handheld gaming devices carving out a slice or just reclaiming a market that exist from the 80s ?

Cloud gaming already exists, it has room to grow, it's a viable solution (or better) for some people, it could also possibly capture a new audience. It doesn't need to capture everyone, it doesn't need to completely displace or be better than all existing forms of gaming for everyone.

I think you should talk to MS since their console sales are tanking while they push 3rd party and play everywhere with cloud. Personally I don't think console hardware can exist without exclusive content. It mbight have been fine when the content was shared on $200-$500 consoles and more expensive computers. But I don't know if it will work when you compete with a cheaper alternative that also has all the games. Personally i think the growth of gamepass and xcloud is on the back of xbox and if xbox hardware continues to decline we will start to see the decline of game pass and xcloud.

I really depends on what MS does with this new hardware coming and if we see them continue to pull away from exclusives.

 

[Shifty Geezer]

And AI was talked about 50 years ago. There's a Turing test after all. Yet here we are.

All tech takes decades to become mainstream. It starts with experiments, then small tests, than a niche market if any, then maybe mainstreaming. The fact something wasn't popular 50 years ago doesn't mean it won't be popular in the future with different implementations and market conditions.

 

[Cyan]

Peter Moore says. "I encouraged the console wars".

Former Xbox executive Peter Moore says the Xbox vs PlayStation console war was “healthy for the industry,” but things have changed.

https://www.videogameschronicle.com...but-has-lost-its-feistiness-peter-moore-says/

Today’s situation, Moore stressed, is different, and while Microsoft continues to make Xbox consoles, he thinks it would stop doing so and focus on games if it could, but that there’s still a public appetite for buying hardware.

“If [Microsoft] had the choice, would they make hardware? No,” he explained. “Would they be delighted if they could be a multi-hundred billion dollar entity delivering content directly to your television, to whatever monitor you choose to play on? You bet.

“You know, the classic Netflix model, you just select – ‘Who’s playing this? 5000 people playing this? I’m going to jump in right now’, no latency, no lag, you’re in, and there doesn’t need to be a box between you and your controller and the TV set. But still, you know, consoles are – as we’ve seen particularly with Nintendo now – people love their hardware.”

Moore added that while he understands that Microsoft’s intention is no longer to get involved in console wars, he says he feels some of the “feistiness” has gone as a result.

“The acquisition of Activision Blizzard changed things, I think – not I think, I know – at Microsoft,” he said, “and so this is not the old days of the console wars, and punching each other, and trying to steal customers and trying to get market share and build your attach rate. This is bigger than that in an economic sense.

 

[Shifty Geezer]

Moore added that while he understands that Microsoft’s intention is no longer to get involved in console wars, he says he feels some of the “feistiness” has gone as a result.

Considering it's moved into everyday politics, and fanboy warring seems to be present in everything these days, that's very much a good thing! XB and PS gamers sat around the campfire singing Kum By Yah as the rest of the world tears each other's eyeballs out...

 

[Nisaaru]

Considering it's moved into everyday politics, and fanboy warring seems to be present in everything these days, that's very much a good thing! XB and PS gamers sat around the campfire singing Kum By Yah as the rest of the world tears each other's eyeballs out...

I actually disagree because it shows a fundamental misunderstanding of the gaming market/psychology. The tribal friction is a part of gaming like of sport.

A lot people need that drama for the entertainment aspect to get their blood pumping and getting excited about "their" team and the "next" console. It's not just about content but vibe.

That MS checked out of it doesn't change the fact that huge markets Sony is dominating are full of people which embrace it. People in Spain/Italy/France take their console choice as serious as they take their choice of football club. You won't be successful by that bland approach.

If MS management doesn't understand the emotional component of their *entertainment* products they are out of touch.

The current NBA is a good example how the lack of rivalry between clubs seriously harms the interest into their product.

 

[tuna]

I still don't really think game streaming is a viable business model. This is the traditional model:
Sell HW + Games + Services. Profit on every part.

Streaming: Invest shitloads in HW and games. Sell subscriptions to access. The reason it works for Netflix and other video streamers is that the HW is really cheap and can be run on any cloud provider. For games you need special HW that is pretty useless for other use cases.

I think something like Geforce cloud is attractive for a subset of the market, but that market is not that big IMO.

 

[Cyan]

I actually disagree because it shows a fundamental misunderstanding of the gaming market/psychology. The tribal friction is a part of gaming like of sport.

A lot people need that drama for the entertainment aspect to get their blood pumping and getting excited about "their" team and the "next" console. It's not just about content but vibe.

That MS checked out of it doesn't change the fact that huge markets Sony is dominating are full of people which embrace it. People in Spain/Italy/France take their console choice as serious as they take their choice of football club. You won't be successful by that bland approach.

If MS management doesn't understand the emotional component of their *entertainment* products they are out of touch.

The current NBA is a good example how the lack of rivalry between clubs seriously harms the interest into their product.

in an idealistic world what Shifty says is right, but people aren't neutral. We all have our tastes and preferences.

Tbh, I don't miss the console wars, after going from a tranquil start with the PC, I got an Xbox in 2005 and without even noticing I ended up bickering for inane stuff when joining the forums.

 

[iroboto]

I still don't really think game streaming is a viable business model. This is the traditional model:
Sell HW + Games + Services. Profit on every part.

Streaming: Invest shitloads in HW and games. Sell subscriptions to access. The reason it works for Netflix and other video streamers is that the HW is really cheap and can be run on any cloud provider. For games you need special HW that is pretty useless for other use cases.

I think something like Geforce cloud is attractive for a subset of the market, but that market is not that big IMO.

If you don’t mind me providing some small corrections. The traditional console model was:
Sell at a massive loss
Make profit on games (attach rate)
Then they layered on make money on services, which has recently eclipsed making money off games.

What’s changed is that they allow for f2p to eat up the market. They can no longer sell their consoles for a massive loss. That’s why console prices are going to stay up, they have to start making a profit off of them, or there is no point anymore.

 

[Charlietus]

If you don’t mind me providing some small corrections. The traditional console model was:
Sell at a massive loss
Make profit on games (attach rate)
Then they layered on make money on services, which has recently eclipsed making money off games.

What’s changed is that they allow for f2p to eat up the market. They can no longer sell their consoles for a massive loss. That’s why console prices are going to stay up, they have to start making a profit off of them, or there is no point anymore.

Consoles aren't getting cheaper because manufacturing costs aren't going down like in past generations. F2P games are a factor for sure, but far from the primary cause.

 

[Shifty Geezer]

I actually disagree because it shows a fundamental misunderstanding of the gaming market/psychology. The tribal friction is a part of gaming like of sport.

A lot people need that drama for the entertainment aspect to get their blood pumping and getting excited about "their" team and the "next" console. It's not just about content but vibe.

I just say keep the tribalism for sports. Not seeing it contribute anything of value elsewhere. Gaming should be about the games. If you are needing a console war to get into it, go join a street gang.

 

[Shifty Geezer]

What’s changed is that they allow for f2p to eat up the market. They can no longer sell their consoles for a massive loss. That’s why console prices are going to stay up, they have to start making a profit off of them, or there is no point anymore.

Ignoring the part they 'let' F2P eat up the market (are they supposed to ban F2P games?), the games generate loads of money through MTs. Sony's revenue is going up and up. I think consoles aren't loss leading any more because it's better business. Fewer users who spend more is more profitable than more user who spend less.

 

[rntongo]

I still don't really think game streaming is a viable business model. This is the traditional model:
Sell HW + Games + Services. Profit on every part.

Streaming: Invest shitloads in HW and games. Sell subscriptions to access. The reason it works for Netflix and other video streamers is that the HW is really cheap and can be run on any cloud provider. For games you need special HW that is pretty useless for other use cases.

Yes we're still not at that point where by cloud gaming is profitable. making hardware, selling it to the consumer and the consumer buying your games and services is still the most logical and proven business model. I dont see this changing in the next 20 years. Biggest issues is games have become quite expensive to make while the experience hasnt materially changed over the last 10 years. Quality of titles has gone down. This is why I think MS will eventually become some sort of 3rd party developer. Because they still need to push their titles onto multiple hw systems yet they have atrophied their own(Xbox). The Activision acquisition seemed to have saved Phil more than it saved Xbox. Thats why we see "Everything is an Xbox" campaign. Its get consumers used to the end of Xbox as its known. Xbox will now be any hw system that can play games made by Xbox. Doesnt have to be games you bought through the MS game store or subscribed to on Game Pass, if you bought an Xbox game on Steam or Playstation store, the machine you're playing on is an Xbox.

I think something like Geforce cloud is attractive for a subset of the market, but that market is not that big IMO.

I think eventually it will gain a larger amount of users but the benefit of having your own console at home accessible from anywhere in the world still makes it more compelling to buy your own $500 box(your own dedicated gaming server). And I think the longer SDLCs will make console generations longer. Long enough to have consoles drop in prices. I think we'll see a drop in PS5 console prices soon. Probably end of 2026 or sometime in 2027. So I think PS5 will become the place to play most games(including those from MS Gaming) until after the next cross gen period is over(somewhere around 2031).

 

[Charlietus]

And I think the longer SDLCs will make console generations longer. Long enough to have consoles drop in prices. I think we'll see a drop in PS5 console prices soon. Probably end of 2026 or sometime in 2027. So I think PS5 will become the place to play most games(including those from MS Gaming) until after the next cross gen period is over(somewhere around 2031).

I would agree with this but sadly Trump exists so tariffs makes this prospect impossible. If things get bad enough I can see next gen waiting for trump term to end.

 

[rntongo]

I would agree with this but sadly Trump exists so tariffs makes this prospect impossible. If things get bad enough I can see next gen waiting for trump term to end.

True this is a major risk to the whole industry as well.

 

[iroboto]

Ignoring the part they 'let' F2P eat up the market (are they supposed to ban F2P games?), the games generate loads of money through MTs. Sony's revenue is going up and up. I think consoles aren't loss leading any more because it's better business. Fewer users who spend more is more profitable than more user who spend less.

lol. Yea, they couldn’t really stop it. Originally if they charged subs to play it, then it would be ok to continue to subsidize it. But PS made the move to ensure f2P didn’t required a paid sub to play and Xbox followed suit and I felt that was the turning point there.

For MS, I think if they were making money off their existing console they would
Be pushing it more. At this point in time the losses they are eating on each console isn’t worth it, which may explain the lack of sales and the increased pricing on series x despite not selling well.

I can’t imagine MTX on these f2p make as much as we think. If you complete a seasons pass, that usually gives them enough coin for the next one. As a total it’s hauling. Per platform, I think that’s harder to determine.

 

[Cappuccino]

I can’t imagine MTX on these f2p make as much as we think.

I know people who have spent hundreds of dollars on ‘free’ games, all on skins and cosmetics.

COD gives you enough points if you fully complete the pass to buy the next one, but if you are playing enough to fill out a season pass every season you probably aren’t going to just use season pass cosmetics. Most of the guys I know seriously into COD have lots of expensive skins and camos.

 

[iroboto]

I know people who have spent hundreds of dollars on ‘free’ games, all on skins and cosmetics.

COD gives you enough points if you fully complete the pass to buy the next one, but if you are playing enough to fill out a season pass every season you probably aren’t going to just use season pass cosmetics. Most of the guys I know seriously into COD have lots of expensive skins and camos.

Yea. I have no doubt whales are out there. That’s generally who MTX are targeted for. They make and design content for whales to consume because the whales typically are the paying customers.

It’s a model that works for mobile companies to live and die by, but platform holders need more reliable income from their player base than the 0.1-1% of F2P players for them to invest in releasing a console at a loss